SKorean firm pulls out from complex in NKorea

KWANG-TAE KIM, The Associated Press

A South Korean company has decided to pull out from a troubled industrial complex in North Korea amid tensions on the peninsula over the North's recent nuclear and missile tests, officials said Tuesday.

Skinnet, a Seoul-based fur manufacturer, would be the first South Korean company to stop operations at the complex in the North's border town of Kaesong since it was opened in 2004 as a key symbol of rapprochement and a hard currency earner for the North.

A Skinnet company official said the pullout would be completed this month. He said it was primarily due to "security concerns" for its employees, but also because of a decline in orders from clients concerned over possible disruptions to operations amid the soaring tensions.

The official spoke on condition of anonymity because he was not authorized to speak with reporters.

Unification Ministry spokesman Chun Hae-sung confirmed the company's decision but renewed Seoul's commitment to developing the complex and asked the North to not to take any unilateral step that could raise concerns among the South Korean companies.

There was no immediate response from North Korea about the planned withdrawal.

A total of 106 companies operate in the industrial zone, which combines South Korean technology and management expertise with cheap North Korean labor.

But its fate has been in doubt since last month when North Korea threatened to scrap all contracts on running the joint complex and said it would write new rules of its own and the South must accept them or pull out of the zone. Adding to the uncertainty is Pyongyang's nuclear test on May 25 and a series of missile test-launches with possibly more to come, which have raised fears of a military confrontation.

Skinnet's announcement came two days before North and South Korean officials plan to hold talks on the factory park in Kaesong. Four South Korean officials left for Kaesong earlier in the day to prepare this week's working-level meeting, according to the South's Unification Ministry. Their previous talks in April ended without any progress.

Some 40,000 North Koreans are employed at the zone, making everything from electronics and watches to shoes and utensils, providing a major source of revenue for the cash-strapped North.

The companies have also been concerned by the detention of a South Korean man working at the complex by North Korean authorities since late March for allegedly denouncing the regime's political system.

North Korea has rejected Seoul's repeated request for his release and denied access to him. His whereabouts remain unclear.

Relations between the two Koreas have significantly worsened since a pro-U.S, conservative government took office in Seoul last year, advocating a tougher policy on the North. Since then, reconciliation talks have been cut off and all key joint projects except the factory park have been suspended.